I feel for people who capitulated during the crisis because they were hurt going both ways. First, they lost money by selling, and then they lost money by not buying.
One method I used to stop people from panic selling was to suggest a 10% decrease in their equity allocation. This made them think, "Am I really going to do this?" Most people who I put this recommendation to decided to leave their portfolio alone. They just wanted to know they had the ability to do something. There were a few people who lowered their allocation, which wasn't hard to do because the portfolio was already at the new allocation. We just didn't do a rebalancing. This had a soothing Affect. We didn't hear from them for the rest of the crisis.
And then there were the people who didn't call us. Instead, they sold everything out on their own in a panic. When we called them to find out what happened to their account (it didn't show on our download from the custodian), they said they just couldn't take it anymore and had to do something right then and there. I wish they would have called us before pulling the plug. But there was nothing we could do at that point. They were burnt toast - burnt on the way down and burnt on the way up.
Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.